SB 397, Cigarette Stamp to Determine Escrow Payments, would have allowed the state to tax cigarette manufacturers that aren't part of the multi-state tobacco settlement.
Lovejoy said the bill closed a loophole and would have generated $7.5 million a year for the state.

But Martinez vetoed the bill because she promised during her campaign not to raise taxes. She said it would have taxed small cigarette manufacturers.

The bill would not have affected a tax exemption for tribal members who buy tobacco on reservations.